NFTs in Gaming: Are they adding value?

As the phrase non-fungible token (or NFT) drifts ever further into mainstream consciousness, the discussion over the use-cases re-emerges, as developers assess the viability of integrating the blockchain technology into their existing platforms. Although not necessarily a new technology, NFTs are still largely confined to online art auctions as per their original function. However, some game developers such as Ubisoft, are starting to embrace the technology for exclusive, yet tradable in-game cosmetics and collectibles.

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What are NFTs and what’s all the fuss about?

NFTs utilise blockchain technology, which serve as a digital ledger or a record of transactions, verified using a shared network of computers. When purchasing an NFT, a record of the transaction is stored on the blockchain proving ownership, with a link to the asset provided to the customer. The asset purchased may take the form of in-game cosmetics, a piece of artwork, a design or piece of content like a specific ‘Tweet’. However, there is much debate surrounding the ownership of assets sold as NFTs and whether they have any true value; for example, you may own an NFT of an image, but the very same image may be available to download for free from a search engine as a JPEG file.

The pro-NFT camp argue NFTs provide a big step towards handing ownership back to content creators, generating revenue for the digital content they have produced. Within the gaming industry, digital ownership could allow for the trade of user-generated content and in-game collectables in games like Roblox and Fortnite for example. This stance is irrelevant to the anti-NFT camp however, who say that the replicable nature of the digital assets means ownership can’t be enforced, making the value of any NFT more or less worthless. However, this critique only really applies to image based NFTs, not necessarily in-game skins or wearables. 

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How are NFTs being used in gaming? 

NFTs currently have two main use-cases within gaming, firstly through limited edition models and microtransactions, and secondly in digital game trading (think digital pokemon cards with extreme rarities). Where previously in-game collectables were tied to a singular account, NFTs open opportunities for users to trade items publicly between different players.

So far, Ubisoft are the front-runners in the NFT space with their Ubisoft Quartz platform. Players of Ghost Recon: Breakpoint on PC can acquire in-game collectables if they meet certain play requirements, such as a number of hours played, varying by the item or NFT in question. If a player chose to sell one of the in-game NFTs, or ‘Quartz Digits’, they would have to do so via Ubisoft’s cryptocurrency partners, Tezos - where they’d receive the relevant cryptocurrency in exchange. 

Games with their own economies are an obvious target for limited edition NFT models, for example in FIFA Ultimate Team where gamers could buy or sell rare or time-gated assets, such as limited edition players. Currently, gamers can buy cosmetics like team kits from the in-game marketplace which, most of the time, are only available to purchase within a certain time frame. If these items were NFTs, in theory, players would be able to buy and sell limited time items whenever they want. NFTs could integrate with most games featuring an in-game store which refreshes over a given time period, such as on Fortnite, Apex Legends, Valorant etc. NFTs could apply to any number of in-game assets such as emotes, sprays, skins, player titles and more. 

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So, what are the downsides of in-game NFTs?

Blockchain technologies use increasingly complex mathematical equations to verify transactions across their networks, which require the use of extremely power hungry graphics cards to process. Subsequently, major concerns have been flagged surrounding the energy consumption of blockchain technologies, for example a single Bitcoin transaction requires roughly 1,173 kWH of energy to process, equivalent to over three months energy for the average UK household. In this respect, NFTs offer an extremely inefficient solution to the problem of hosting custom in-game marketplaces, with some pretty dire environmental consequences looming on the horizon. The initial reaction from gamers towards Ubisoft’s efforts appears to be a bit uncertain, with just 15 NFTs sold by the end of 2021, and gamers touting environmental concerns as a major issue. 

As NFTs simply provide a blockchain verified URL to an existing asset hosted elsewhere on the web, questions over the true ownership of potential assets hold weight with gamers. For example if a game developer drops support for their game, or their servers are closed, the NFT URL may become defunct, in which case the player will lose their asset. With existing games already offering tradable assets without the use of NFTs, such as skins on CS:GO or in-game currency on FIFA, the question of their viability re-emerges, especially considering the environmental impact.

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What’s the bottom line?

Although NFTs offer a viable solution for hosting tradable in-game assets and open the doors for the monetisation of user-generated content, it’s hard to ignore the inefficiencies and environmental impacts associated with enabling those features via NFT. Considering the stand-offish reaction from gamers to Ubisoft’s NFT endeavours, it’s yet to be seen whether gamers will ever fully adopt the technology. As with most infant technologies, only time will tell if a long-term viability will emerge, or if NFTs are yet another internet phase destined for the history books.